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The Baidu Music Settlement: A Turning Point for Copyright Reform in China?

This paper is a case study of the legal aspects of Baidu’s online music distribution business from its inception in 2000 to the July 2011 settlement. After successfully withstanding several legal challenges over the 2005-2011 period, Baidu suddenly concluded an out-of-court settlement with a group of music distribution companies, under which Baidu would pay royalties for every track played and downloaded through its music distribution platform while acquiring legal distribution rights to music. The objective of the paper is to identify the factors behind Baidu’s surprising out-of-court settlement, elaborate on the significance of this agreement for copyright enforcement in China, and speculate on the future of digital content distribution in that country. We conclude that several factors, that singly may not have influenced Baidu to alter its music distribution model, combined to bring about this change. The Baidu settlement is therefore not a turning point, but a manifestation of a gradual but significant shift in intellectual property enforcement in China.